By Tim Hepher, Joanna Plucinska and Allison Lampert
(Reuters) -Planemakers, airlines and suppliers are combing through billions of dollars worth of contracts to check their exposure to tariffs after a major U.S. supplier sparked debate over who should pay for an emerging trade war, industry sources said on Monday.
Reuters reported on Friday that U.S. supplier Howmet Aerospace had declared a “force majeure event,” effectively claiming the right to halt shipments if they were affected by U.S. President Donald Trump’s tariffs.
Howmet makes engine parts, fuselage fasteners and other components.
Analysts said Howmet’s rare and unexpected declaration that it can legally avoid contract obligations due to unavoidable circumstances will amplify debate about who should bear the cost for chronic disruption to parts supplies, including new tariffs.
So far, the answer has been passengers, as higher costs ripple along an $800-billion-plus supply chain from parts to aircraft and airlines, and ultimately to higher fares.
Trump’s 20% tariffs on European Union products including Airbus planes, and likely EU retaliation against U.S.-based Boeing, may put that to the test.
“Howmet has made a chess move, declaring force majeure and threatening to halt shipments. We all know it takes just one nut or bolt to stop the … supply chain,” Jefferies analyst Sheila Kahyaoglu wrote.
“This ultimately is an effort to pass on rising input costs in areas not already protected … In our view, the potential to stop shipments creates leverage for Howmet, but also is pitted against its customers’ willingness to cave.”
Howmet declined comment.
Aside from an 18-month transatlantic tariff war over Airbus and Boeing subsidies in 2020 and 2021, the industry has broadly operated under a 1979 treaty on zero-duty trading in aerospace that includes the U.S. and Canada, but not Mexico.
“By definition, aviation is a global market for both buyers and sellers. When you introduce friction like this for such large sums of money, you have instant chaos, not only for airplanes but also for engines and multiple spares from avionics to seats,” said aviation adviser Bertrand Grabowski.
A European lawyer said some aerospace clients had already made enquiries about how to avoid the tariff fallout.
“I don’t think any of my clients have got to the stage yet of specifically wanting to (trigger) contractual provisions. But it may not take very long,” he said, asking not to be identified because of potential client conflicts.